Thousands of people take part in the annual Gay Pride parade in Tel Aviv. Photograph: David Buimovitch/AFP/Getty Images

Rainbows were everywhere – on faces, belts, garlands, T-shirts, paper fans, tattoos and hats. One man had a python draped around his neck, a soldier in uniform carried a rainbow flag, and a young woman, almost naked, danced to the throbbing music, oblivious to the crowds and the searing heat.

On Friday, thousands of people poured on to Tel Aviv's Gordon beach at the end of the annual Gay Pride parade in celebration of sexual freedom, tolerance and their city's ambition to be the most gay-friendly place on Earth.

"The weather is hot, the guys are hot, it's a hot city," said 28-year-old Amit Margalit, wearing turquoise shades and matching beads over his bare chest.

The parade's organisers estimated that more than 100,000 Israelis, plus another 5,000 tourists, took part. Every square metre of shade was crammed, friends greeted one another with sweaty kisses and hugs, stalls selling ice-cold beer were doing brisk trade and traffic jams backed up around closed streets.

Tel Aviv, in sharp contrast to Jerusalem, is a liberal, hedonistic and secular city, where leisure life revolves around beaches, cafes and nightclubs.

Lonely Planet named it one of its top three cities in the world for 2011, describing it as "the flipside of Jerusalem, a modern Sin City on the sea rather than an ancient Holy City on a hill" and adding: "There are more bars than synagogues, God is a DJ and everyone's body is a temple." The Israeli-Palestinian conflict is rarely on the radar.

According to Tel Aviv's 30-year-old deputy mayor, Asaf Zamir, 16% to 17% of the city's 403,000 population is gay.

"It's a very strong community here, a comfortable arena for the gay community. Two men walking hand in hand is a very normal thing," he said.

The city municipality funded a gay centre and was promoting gay tourism, he added.

Shai Doitsch, a spokesman for Aguda, Israel's national gay organisation, said lesbians and gay men were not confined to specific bars or clubs.

"We really are a gay city," he said. "There are no special gay areas – if you are gay or lesbian, you are welcome everywhere."

Pictures of lesbians were given equal billing to gay men in promotional material for this year's parade, the lesbian activist Anat Nirsaid said, adding: "This is unique. If you look at most cities' Pride publications, you always see men at the front."

But there was still a need for campaigning in Israel, Doitsch said. "We're not in paradise yet," he explained.

"Jerusalem is a very sensitive place. We don't expect to have gay pride parades in Mea Sharim [an ultra-orthodox area of that city].

Jerusalem hosts an annual Gay Pride march, which is a much more political event than the Tel Aviv celebration.

Homosexuality is unacceptable to both ultra-orthodox Jews and Muslims.

According to Zamir, gay Palestinians come to Tel Aviv – many illegally – to enjoy its liberal atmosphere "but they do not announce themselves with a placard saying 'I'm a gay Palestinian'".

Palestinians from the West Bank and Gaza are not permitted to cross into Israel without a permit, which is rarely granted.

Back on the beach, the party – which began at 10am – was set to continue into the evening. "Every year, this just gets bigger," said Margalit.